Here’s the story I had in the Globe this week about the interesting business of taking over stalled condo projects. It’s a bit of a specialty area that’s developing for lawyers and accounting firms, as they work with companies willing to take the plunge. They’re not the easiest development deals, as there are lots of legal, tax and financing complications, but some are forging ahead anyways.
By the way, lawyer John Sandrelli, whom I quote in this story, says this is only the beginning, with lots more to come.
The 2008 financial crisis created an unprecedented opportunity for distressed real estate acquisitions in Canada’s hot markets. When the pre-sale condo market “stopped dead almost overnight,” dozens of projects in Toronto, Calgary, Vancouver, and Kelowna found themselves in legal limbo – some in receivership, others under creditor protection, many more teetering on the edge of bankruptcy.
The Globe investigation revealed how few companies possess the appetite for these complex deals. Taking over a stalled project isn’t simply buying distressed assets at fire-sale prices. It requires navigating intricate legal frameworks, securing skeptical lenders, reassuring nervous buyers, and often redesigning projects to meet current market realities.
John Sandrelli of Fraser Milner Casgrain, whose firm handled multiple distressed projects including Vancouver’s Jameson House, identified three critical challenges: proving to lenders you have a better plan with lower costs and more equity; understanding the legal differences between receivership and CCAA protection; and maintaining substantial capital reserves for inevitable surprises.
The opportunity attracted “opportunistic investors with good risk tolerance” who could make quick decisions. Companies like Bosa Properties, which took over the $180-million Norman Foster-designed Jameson House, and Concord Pacific, which rescued Surrey’s massive Infinity project, saw chances to put idle workers back to work while acquiring prime properties.
These deals required a unique mindset – balancing opportunity with extreme complexity in an uncertain market.
